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Rich, Poor And Growth-Miracle Nations: Multiple Equilibria Revisited

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  • Lilia Maliar

    ()
    (Universidad de Alicante)

  • Dmytro Kylymnyuk

    (Universidad de Alicante)

  • Serguei Maliar

    (Universidad de Alicante)

Abstract

This paper presents a two-sector growth model of international trade that can account for the key features of the postwar world development experience. Two sectors represent the traditional primitive production and the modern sophisticated production. Due to increasing returns in the modern sector, the open-economy version of our model gives rise to three different equilibria: one in which the country produces only primitive goods and converges to a low-income steady state; another in which it produces both primitive and sophisticated goods and converges to the world-average steady state; and a third in which it specializes in the production of sophisticated goods and converges to a balanced growth path. We argue that the development experiences of poor, rich and growth-miracle countries are well described by these three equilibria.

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File URL: http://www.ivie.es/downloads/docs/wpasad/wpasad-2004-39.pdf
File Function: Fisrt version / Primera version, 2004
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Bibliographic Info

Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 2004-39.

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Length: 46 pages
Date of creation: Oct 2004
Date of revision:
Publication status: Published by Ivie
Handle: RePEc:ivi:wpasad:2004-39

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Keywords: International trade; small-open economy; multiple equilibria; poverty trap; growth miracles; coordination proble;

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References

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  1. Jaume Ventura & Francesco Caselli, 2000. "A Representative Consumer Theory of Distribution," American Economic Review, American Economic Association, vol. 90(4), pages 909-926, September.
  2. Rodrik, Dani, 1996. "Coordination failures and government policy: A model with applications to East Asia and Eastern Europe," Journal of International Economics, Elsevier, vol. 40(1-2), pages 1-22, February.
  3. Lilia Maliar & Serguei Maliar, 2002. "The Representative Consumer In The Neoclassical Growth Model With Idiosyncratic Shocks," Working Papers. Serie AD 2002-20, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
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  7. Graham, Bryan S. & Jonathan Temple, 2002. "Rich Nations, Poor Nations: How much can multiple equilibria explain?," Royal Economic Society Annual Conference 2002 91, Royal Economic Society.
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  9. Gylfason, Thorvaldur & Herbertsson, Tryggvi Thor & Zoega, Gylfi, 1999. "A Mixed Blessing," Macroeconomic Dynamics, Cambridge University Press, vol. 3(02), pages 204-225, June.
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  15. Young, Alwyn, 1991. "Learning by Doing and the Dynamic Effects of International Trade," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 369-405, May.
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  20. repec:fth:stanho:e-92-3 is not listed on IDEAS
  21. Kemp, Murray C & Schweinberger, Albert G, 1991. "Variable Returns to Scale, Non-uniqueness of Equilibrium and the Gains from International Trade," Review of Economic Studies, Wiley Blackwell, vol. 58(4), pages 807-16, July.
  22. Gylfason, Thorvaldur & Herbertsson, Tryggvi Thor & Zoega, Gylfi, 1997. "A Mixed Blessing: Natural Resources and Economic Growth," CEPR Discussion Papers 1668, C.E.P.R. Discussion Papers.
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Citations

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Cited by:
  1. Dmytro Kylymnyuk & Lilia Maliar & Serguei Maliar, 2007. "A model of unbalanced sectorial growth with application to transition economies," Economic Change and Restructuring, Springer, vol. 40(4), pages 309-325, December.
  2. Roland Eisen, 2008. "On Growth and Income Distribution in a Globalizing World," Revista de Economía y Estadística, Universidad Nacional de Córdoba, Facultad de Ciencias Económicas, Instituto de Economía y Finanzas, vol. 0(2), pages 33-46, July.

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